Changes

===Bailout Crisis ===

===Bailout Crisis ===

After spending over a trillion dollars in cash and guarantees (by Bush and Obama combined), the [[bailout]] of the financial system by October 2009 seems to have saved the banks but failed thus far to stimulate economic recovery. Obama started to decline in the polls, as independents and Republicans became increasingly critical.  A firestorm of outrage swept the nation in March when it was learned that AIG insurance company, now 80% government owned, was paying $165 million in bonuses to the traders that had caused $60 billion in losses. Geithner was appointed to the Treasury largely on the basis of his work at the New York Fed, where his most important action was to design the bailout of AIG. Under Geithner's leadership it received $170 billion from the government.

After spending over a trillion dollars in cash and guarantees (by Bush and Obama combined), the [[bailout]] of the financial system by October 2009 seemed to have rewarded the big banks but failed to stimulate the economy and job creation. Obama started to decline in the polls, as independents and Republicans became increasingly critical.  A firestorm erupted in March when it was learned that AIG insurance company, now 80% government owned, was paying $165 million in bonuses to the traders that had caused $60 billion in losses. Geithner was appointed to the Treasury largely on the basis of his work at the New York Fed, where his most important action was to design the bailout of AIG. Under Geithner AIG received $170 billion from the government.

[[Image:Toxic-assets.jpg|thumb|300px|left|Geithner plans to sell toxic assets to Wall Street]]

[[Image:Toxic-assets.jpg|thumb|300px|left|Geithner plans to sell toxic assets to Wall Street]]

With major banks on the verge of failure, Treasury Secretary [[Timothy Geithner]] unveiled yet another massive bailout program in mid-February. Trillions would be spent to move toxic assets out of the banks, but few details were provided. The widespread reaction was very negative, and Geithner lost more of his credibility as a problem solver.  Geithner finally came back with a plan on March 23 that will not need additional funding or approval by Congress.  The Treasury will use $100 billion from the Troubled Asset Relief Program (TARP), as well as new capital from private investors, in order to generate $500 billion in purchasing power to buy toxic loans and assets. The program could potentially expand to $1 trillion over time.  In June many of the major banks started to repay their federal loans, as anxiety eased about their future.

With major banks on the verge of failure, Treasury Secretary [[Timothy Geithner]] unveiled yet another massive bailout program in mid-February. Trillions would be spent to move toxic assets out of the banks, but few details were provided. The widespread reaction was very negative, and Geithner lost more of his credibility as a problem solver.  Geithner finally came back with a plan on March 23 that did not need additional funding or approval by Congress.  The Treasury used $100 billion from the Troubled Asset Relief Program (TARP), as well as new capital from private investors, in order to generate $500 billion to buy toxic loans and assets. The program could potentially expand to $1 trillion over time.  In June some of the major banks started to repay their federal loans.

[[Image:Jobs09q1.jpg|thumb|250px]] [[Image:Job-loss-09.jpg|thumb|250px|US job losses January 1-March 31, 2009]]

[[Image:Jobs09q1.jpg|thumb|250px]] [[Image:Job-loss-09.jpg|thumb|250px|US job losses January 1-March 31, 2009]]

The Federal Reserve in June said conditions remained weak and even deteriorated in many regions of the country, with commercial real estate and labor markets in deep trouble.  The Fed is not expecting a significant boost in economic activity in 2009. Despite costly federal efforts to restart credit markets, it remains very difficult for consumers and businesses to obtain loans.

The Federal Reserve in June said conditions deteriorated in many regions of the country, with commercial real estate and labor markets in deep trouble.  The Fed did not forecast a significant boost in economic activity in 2009. Despite costly government efforts to encourage borrowing, it remained very difficult for consumers and businesses to obtain loans.

The General Motors bailout, which Obama promised would make taxpayers money, resulted in an $11 billion loss;<ref>http://www.outsidethebeltway.com/taxpayers-to-lose-at-least-11-billion-on-general-motors-bailout/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+OTB+%28Outside+The+Beltway+%7C+OTB%29</ref> however Democratic Congressional seats in the areas affected that recieved the aid, remained Democratic in the [[2010 Midterm elections]] despite the persistent high unemployment among workers who were not directly employed in the auto industry in those same districts.

The General Motors bailout, which Obama promised would make taxpayers money, resulted in an $11 billion loss;<ref>http://www.outsidethebeltway.com/taxpayers-to-lose-at-least-11-billion-on-general-motors-bailout/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+OTB+%28Outside+The+Beltway+%7C+OTB%29</ref> however Democratic Congressional seats in the areas affected that recieved the aid, remained Democratic in the [[2010 Midterm elections]] despite the persistent high unemployment among workers who were not directly employed in the auto industry in those same districts.